THE PRESIDENT: A couple of questions. First, we'll have a couple
of statements.

It's my honor and honor of senior members of my administration to
welcome you, sir, to the Oval Office. Kuwait is a steady and strong
friend of the United States. I thank you for your friendship.

This country led a vast coalition to make the world more secure and
more peaceful, and Kuwait was steadfast in your support of our common
desire to respect human life, to promote peace, and I want to thank you
for that very much. We called upon you to make some difficult choices,
and you made those choices, and the world is better off as a result of
the decisions your government made. So it's my honor to welcome you
here, sir, today.

PRIME MINISTER SABAH: I would like to take this opportunity to
thank the President and thank you, Mr. President, for this invitation
and for asking us to come here. I believe that the discussions that I
had with you were frank discussions, and they were discussions between
friends, people who are friends and allies together.

I would like to assure you that this friendship and the alliance
between our two countries and our two peoples will continue. And it
will not be limited to the official government levels, but it will be
also, and continue to be between the people. This relationship will
continue to exist because we strongly believe that it's in the interest
of the peoples in both countries, as well as the region.

Once again, Mr. President, thank you, sir, for this invitation.

THE PRESIDENT: Mr. Prime Minister.

Terry.

Q Mr. President, what's your evaluation of the new Palestinian
Prime Minister? Do you think he's someone that you'll be able to work
with as well as you were able to work with Mr. Mahmoud Abbas?

THE PRESIDENT: Well, time will tell. I still believe strongly
that two states living side by side in peace is a hopeful vision for
the future of the Middle East. The road map is still there. The
fundamental question is whether or not people -- peaceful people --
will be on the road.

And one of the essential tenets of the road map is that people are
responsible, parties need to be responsible for creating the conditions
necessary for peace to prevail. Probably the most -- "the" most
important condition for peace to prevail is for all parties to fight
off terror, to dismantle organizations whose intent is to destroy the
vision of peace.

And the Prime Minister-designee -- I understand he accepted the
position minutes ago -- the question is will he be confirmed by his --
the parliament. And his job is, if he's interested in a two-state
solution, is to consolidate power within his administration, to get the
security forces under control -- all security forces -- and then to
unleash those security forces against killers. And we can make
progress if that's the case.

But the Prime Minister and I discussed this subject. He made a
very interesting point, that nations need to cut off funding to
terrorist groups. And I appreciated that very much. In other words,
that's part of the responsibility. Israel, of course, has got
responsibility not only to protect her people, but to create the
conditions necessary for those in the Palestinian Authority who do
believe in peace, who do believe in the vision, to prevail.

And so it's tough times there now, and we mourn the loss of
innocent life. But the vision is still there, because I strongly
believe it's in the interest of everybody that two states live side by
side in peace.

Would you care to call on somebody from the press?

Q Mr. President, what do you expect from Kuwait, to play a role
in the future in peace, and the future of Iraq? And how do you view
this visit, and Kuwait as an ally to the United States?

THE PRESIDENT: Well, this is a very important visit, because it
gives me a chance to publicly offer my sincere thanks to an important
leader in the Oval Office. Secondly, we did discuss our mutual
responsibilities to promote peace. I assured the Prime Minister that
this country would stay in Iraq to fulfill our promise to Iraqi
citizens who are desperate for peace and for the chance to succeed.

The Prime Minister said that he appreciated our commitment, he was
glad to be reassured that we will finish the job, and said he'd be
willing to help. And I appreciate that.

Our friendship is one where we're able to have mutual, but frank
discussions, and we will continue our discussions over lunch. And I am
grateful for his presence and his willingness to talk frankly about
issues that relate to our future.

Steve.

Q -- how are you going to get a new U.N. resolution on Iraq?
Are you willing to concede any control to the U.N.?

THE PRESIDENT: Oh, I think that -- we're hopeful we can get a good
resolution. We're in consultations now. I think it's in everybody's
interest that Iraq be free and be peaceful. And we will continue to
work through issues. I don't think they're opposed to the resolution,
I think you're putting words in their mouth that -- they may want to
fine-tune a resolution, and we're -- listen, we're open for
suggestions.

But what is necessary is, however, to trust the Iraqi people to --
the Governing Council to come up with a timetable for elections.
They're making good progress there now. They've got -- a minister is
in charge of key parts of the country. They are beginning to put in
place the timetable necessary for the writing of a constitution. And
there will be free elections. And that ought to be decided by the
Governing Council. These are people who know full-well how best to
move Iraq forward.

And we'll work with all parties involved. My call, however, to
nations is, is that let us not get caught up in past bickering. Let us
move forward. A free Iraq is in everybody's interest. A peaceful Iraq
is in the world's interest. And I'm confident we can work together to
achieve that. The Secretary of State will be going around the world
urging people to make serious contributions, and I will, once again,
make that plea. We expect and hope that our friends contribute to the
reconstruction of Iraq. It is in your interest that you do so.

Final question, Dick.

Q Mr. President, the $87 billion you say will be needed for
peacekeeping in Iraq accounts for roughly a fifth of the domestic
discretionary spending next year. Realistically, sir, how can you do
that and hold the line on domestic programs, without gutting those
programs? Can you really have one --

THE PRESIDENT: Of course, we can do -- first of all, the $87
billion, it's important to spend that money. It's in our national
interest that we spend it. A free and peaceful Iraq will save this
country money in the long-term. It's important to get it done now.

And, yes, I also believe the 4 percent discretionary -- increase in
discretionary spending number I sent up to Congress makes sense.
Somebody -- I heard somebody say, well, what we need to do is have a
tax increase to pay for this. That's an absurd notion. You don't
raise taxes when an economy is recovering. Matter of fact, lower taxes
will help enhance economic recovery. We want our people going back to
work. We've got good momentum now in our economy; we don't want to
destroy that momentum.

But the $87 billion is worth it. And I look forward to working
with Congress to get that number completed and get the job done.